A State Transformed: Immigration and the New California

Steven A. Camarota is the Director of Research and Karen Jensenius is a demographer at the Center for Immigration Studies.

Between 1970 and 2008 the share of California’s population comprised of immigrants (legal and illegal) tripled, growing from 9 percent to 27 percent.1 This Memorandum examines some of the ways California has changed over the last four decades. Historically, California has not been a state with a disproportionately large unskilled population, like Appalachia or parts of the South. As a result of immigration, however, by 2008 California had the least-educated labor force in the nation in terms of the share its workers without a high school education. This change has important implications for the state.

Among the changes in California:

In 1970, California had the 7th most educated work force of the 50 states in terms of the share of its workers who had completed high school. By 2008 it ranked 50th, making it the least educated state. (Table 1a)

Education in California has declined relative to other states. The percentage of Californians who have completed high school has increased since 1970; however, all other states made much more progress in improving their education levels; as a result, California has fallen behind the rest of the country. (Table 1b)

The large relative decline in education in California is a direct result of immigration. Without immigrants, the share of California’s labor force that has completed high school would be above the national average.

There is no indication that California will soon close the educational gap. California ranks 35th in terms of the share of its 19-year-olds who have completed high school. Moreover, one-third (91,000) of the adult immigrants who arrived in the state in 2007 and 2008 had not completed high school.2

In 1970 California was right at the national average in terms of income inequality, ranking 25th in the nation. By 2008, it was the 6th most unequal state in the country based on the commonly used Gini coefficient, which measures how evenly income is distributed. (Tables 2a and 2b)

California’s income distribution in 2008 was more unequal than was Mississippi’s in 1970. (Tables 2a and 2b)

While historical data are not available, we can say that in 2008 California ranked 11th highest in terms of the share of its households accessing at least one major welfare program and 8th highest in terms of the share of the state’s population without health insurance. (Tables 3 and 4)

The large share of California adults who have very little education is likely to strain social services and make it challenging for the state to generate sufficient tax revenue to cover the demands for services made by its large unskilled population.

Introduction

California is home to the high-tech and entertainment industries, has one of the nation’s largest tourism industries, and has the most productive agricultural land in the country. Historically it was not a state with a disproportionately large unskilled population, unlike Appalachia, parts of the American South, or the Rio Grande valley. Over the last four decades, however, immigration has significantly increased the size of the unskilled population in the state relative to the rest of the country. California now has one of the most skewed income distributions of any state and has relatively high rates of welfare use and lack of health insurance.

Methodology

The information for this Memorandum is drawn from the public-use files of the 1970 Census, 2008 American Community Survey (ACS), and the 2007 to 2009 Current Population Surveys (CPS). These government surveys include what the Census Bureau describes as the native-born and foreign-born populations. The foreign-born are defined as persons living in the United States who were not U.S. citizens at birth. In this report we use the terms foreign-born and immigrant synonymously. Immigrants include naturalized American citizens, legal permanent residents (green card holders), illegal immigrants, and people on long-term temporary visas such as students or guest workers. They do not include those born abroad of American parents or those born in outlying territories of the United States, such as Puerto Rico, who are considered U.S.-born or native-born. In this report we use the terms native, native-born, and U.S.-born synonymously. Prior research indicates that Census Bureau data like the ACS and CPS capture the overwhelming majority of both legal and illegal immigrants. The Department of Homeland Security (DHS) Office of Immigration Statistics estimates that the undercount of immigrants in Census Bureau is about 5.5 percent. Most of this undercount is of the illegal immigrant population. The undercount of illegal immigrants specifically is thought by DHS to be 10 percent.3

Educational attainment for those in the labor force is based on the highest grade completed from the 1970 Census and the 2008 ACS. Those in the labor force are either working or are looking for work. Household income inequality is measured based on the widely used Gini coefficient. The Gini coefficient can range from 0 to 1; the higher the coefficient, the greater the level of income inequality. If income was distributed perfectly evenly through society the Gini coefficient would equal 0, and if all the income was in the hands of one household it would equal 1.

To measure welfare use, we examine eight of the largest programs using the March CPS. The March CPS oversamples minorities and includes questions on health insurance and welfare use. The March CPS is also referred to as the Annual Social and Economic Supplement (ASES).4 We combine three years of data (2007, 2008, and 2009) to get more statistically robust estimates for smaller states that we compare to California. For health insurance coverage, we also use the same three years of the ASES. Persons are considered uninsured if they report that they had no health insurance during the calendar year prior to the survey.

The overwhelming majority of immigrants in California are in the country legally. In a 2007 study we estimated that 28 percent of California’s total foreign-born population in the CPS was comprised of illegal immigrants.5 Estimates by the Department of Homeland Security for January 2009 also indicate that about one-fourth of the state’s total immigrant population in the ACS was in the country illegally.6

Findings

Educational Attainment. Tables 1a and 1b report the share of persons in the labor force who had not completed high school in 1970 and 2008. Those in the labor force are either working or looking for work. The economy of a state will primarily reflect the productivity of its workers and educational attainment is an important indicator of productivity. Having a large share of workers with relatively little education may benefit specific employers, but it also has wide-ranging consequences for such things as income distribution, poverty, tax collection, and the need for social services.

The states at the top of Tables 1a and 1b are those with the smallest percentage of workers who had not graduated high school in 1970 and 2008. The table shows that all states, including California, made progress in reducing the share of their labor force that is comprised of those without high school education between 1970 and 2008. Nationally, the improvement was 29 percentage points. However, California made the least progress of any state. Some states, such as North and South Carolina, Georgia, and Kentucky, reduced their share of those without a high school education by more than 40 percentage points. The states that made the biggest gains in lowering the share of workers who are high school dropouts were generally those in which a very large share of workers had less than high school education in 1970. Several states that were similar to California in 1970 still made significant progress. These include Washington and Nebraska, where the improvement was 20 and 24 percentage points, respectively. But in California the improvement was just 13 percentage points, well below the national average and generally much less than other states that were similar to California in 1970.7

Immigration is the primary reason California has become the least-educated state measured in terms of the share of workers with less than a high school education.8 Tables 1a and 1b show that, if only native-born persons are considered, California would rank 25th in the nation in terms of the share of its labor force comprised of those with at least high school education, not last. In 2008, 5.6 percent of natives in the California labor force had not completed high school. When immigrants are counted, 16 percent of the state’s labor force is comprised of those who have not completed high school. Immigration has a very large impact on the education level of California’s labor force.

There is no indication that California will soon close the educational gap with other states. The state ranked 35th in terms of the share of its 19-year-olds who have graduated high school. Of 19-year-old immigrants in California, 28.1 percent have not graduated high school. Of those 19-year-olds who have not graduated high school, 63.4 percent are immigrants themselves or are the children of immigrant fathers or mothers.9 Immigration has thus played a significant role in shaping the next generation of California’s workers.

California also will not soon close the gap with the rest of the country because immigration (legal and illegal) continues to add large numbers of unskilled workers to the state. Of adult immigrants who arrived in California in 2007 and the first half of 2008, 30.8 percent (91,000) had not completed high school.10 Given the large number of unskilled immigrants being added to the state and the relatively low rate of high school completion among its 19-year-olds just entering the labor force, it seems very likely that California will remain one of the least-educated states in the country for some time.

Income Inequality. Tables 2a and 2b report household income inequality using the Gini coefficient. A lower Gini coefficient means the state has a more equal distribution, while a higher Gini coefficient indicates more unequal distribution. In 1970, California’s Gini coefficient of .3998 was very similar to the national average of .4016. In fact, the state had the 25th most uneven income distribution of the 50 states. But by 2008 it had the sixth most uneven distribution of income. Income inequality generally increased in the United States between 1970 and 2008. The national increase was .0408, or about 10 percent. In California the increase was .0721, or 18 percent. As a result, California has become a much more unequal state relative to most other states. Immigration can add to income inequality by adding to the lower income population directly and by increasing the supply of less-educated workers and thereby reducing wages for all persons who work at jobs that require relatively modest levels of education.

Welfare Use and Uninsured. Table 3 reports welfare use for major welfare programs. With 24.5 percent of all households using at least one major welfare program, California ranks as the 11th highest state in the country in terms of welfare use. Table 3 shows a very large difference between immigrant and native households.11 Table 4 examines the share of residents that lack health insurance by state. The table shows that 18.5 percent of California residents lack health insurance, the 5th highest rate of uninsurance in the country. Table 4 shows that a much larger share of immigrants and their young children in California are uninsured compared to natives and their children. Tables 3 and 4 show that in addition to having a relatively high level of income inequality, the state also ranks high in welfare use and lack of health insurance. The tables also show that if immigrants are not included then the state would not rank high in terms of welfare use or lack of health insurance.

Conclusion

Historically, California was not a state with disproportionately large unskilled and low-income populations. Relatively to other states it had one of the more educated labor forces in terms of the share of workers who had completed high school. But today it is the state with the largest share of its labor force that has not completed high school. This relative change is directly the result of immigration. It has also become a state with one of the most skewed income distributions and it is among the states with high rates of welfare use and lack of health insurance. While some employers argue that a continuing stream of unskilled immigrant workers is desirable, such a policy has consequences. This Memorandum has examined some of those consequences. The low level of educational attainment in the state is likely to create challenges in California for the foreseeable future.

Legal immigration is a far more important factor shaping California than is illegal immigration. Our research and that of the Department of Homeland Security indicate that about three-fourths of California’s immigrants are in the country legally. Absent a change in immigration policy, large numbers of less-educated immigrants (legal and illegal) will continue to settle in the Golden State, adding further to an already large unskilled work force.

2 Figures are based on the public-use file of the 2008 American Community Survey. The survey shows that 366,162 new immigrants arrived from aboard and settled in California. Of the adult new arrivals, 30.8 percent (91,000 out of 295,000 persons 18+) had not completed high school. The survey is designed to be representative as of the middle of 2008.

3 See Table 2 in Estimates of the Unauthorized Immigrant Population Residing in the United States: January 2009, at http://www.dhs.gov/xlibrary/assets/statistics/publications/ois_ill_pe_20.... DHS estimates use the American Community Survey, which like the Current Population Survey, is collected by the Census Bureau. The data in both cases are weighted in a similar fashion so the results are similar.

4 The eight major welfare programs from the Current Population Survey are SSI (Supplemental Security Income for those with low-incomes, the elderly, and the disabled), TANF (Temporary Assistance to Needy Families), WIC (Women Infants and Children food program), free school lunch, food stamps (now called Supplemental Nutrition Assistance Program), Medicaid (health insurance for those with low incomes), public housing, and rent subsidies.

6 The 2008 ACS shows a total foreign-born population in California of 9,858,027. (This is based on the single-year 2008 estimate from the Census Bureau on American Fact Finder at Census.gov.) The Department of Homeland Security’s estimates for January 2009, which are based on the 2008 ACS, show that 2.85 million illegal immigrants were living in California at the beginning of January 2009. Using the total foreign-born population from 2008 as the denominator would mean that 28.9 percent of the state’s immigrants are in the country illegally. However, DHS adjusts upward by 10 percent its ACS-based estimates of the illegal population so the actual share is somewhat lower. See Table 2 in Estimates of the Unauthorized Immigrant Population Residing in the United States: January 2009, at http://www.dhs.gov/xlibrary/assets/statistics/publications/ois_ill_pe_20....

7 There are other ways to think about education levels. In terms of the share of its workers who have at least a bachelor’s degree, California is very similar to the national average for those in the labor force — 31.2 percent for the state compared to 30.2 percent for the nation as a whole. One way to look at the situation is that in other states there are more high school graduates and persons with some college. In California, the educational distribution trends to be hollowed out in the middle and there are relatively fewer high school graduates or those with some college and more persons who have not completed high school. This creates what might be termed a polarized educational distribution in the state.

8 Tables 1a and 1b are based on those in the labor force. If we look at all working-age people (18 to 65), not just those in the labor force, the results remain virtually unchanged. In 2008, California had the second-least educated population, after Texas, with 18.7 percent of its working-age population having not graduated high school.

9 Data are from 2007 to 2009, allowing for an examination by immigrant generation which shows that, of immigrant 19-year-olds in California, 28.1 percent have not graduated high school; for those born in the United Sates with at least one immigrant parent, 18.5 had not completed high school; and for those with two U.S.-born parents, 11.7 percent had not graduated high school. Thus the children of natives are much more educated than are those of immigrants.

We use the Annual Social and Economic Supplement of the Current Population Survey from 2007 to 2009 to look at 19-year-olds’ graduation rates. The CPS produces results that are almost exactly the same as the ACS, but unlike the American Community (ACS), it includes a question on birth place of mother and father allowing us to distinguish among U.S.-born 19-year-olds who have immigrant versus native-born parents. The CPS is a much smaller sample than the ACS so it cannot be used to examine a single age (19-year-olds) in small states, but for a very large state like California three years of the CPS produces good estimates.

10 Figures are based on the public-use file of the 2008 American Community Survey. The survey shows that 366,162 new immigrants arrived from abroad and settled in California. Of the adult new arrivals, 30.8 percent (91,000 out of 295,000) had not completed high school. The survey is designed to be representative as of the middle of 2008.

11 Most newly arrived legal immigrants and almost all illegal immigrants are barred from using welfare programs. However, most legal immigrants in California are not newly arrived. Moreover, some states, like California, use their own funds to cover otherwise ineligible immigrants. In addition, prohibitions on use do not apply to all programs. Most importantly, the U.S.-born children of immigrants, who comprise the majority of children in immigrant households, are awarded U.S. citizenship at birth and have welfare eligibility like any other citizen. Immigrant households in California tend to have the highest welfare use rates for food assistance (food stamps, WIC, and school lunch) and Medicaid. Use of cash assistance programs is more similar to households headed by U.S.-born persons. It is also important to note that most households (immigrant or U.S.-born) accessing welfare programs have at least one worker. But their low incomes mean they are still eligible for welfare programs.

The Center for Immigration Studies is an independent, non-partisan, non-profit research organization founded in 1985.
It is the nation's only think tank devoted exclusively to research and policy analysis of the economic, social, demographic,
fiscal, and other impacts of immigration on the United States.